Usury

Usury: How American Society Was Destroyed

Preface

            By 2008, the problem the USA faced was a new version of the same one faced by Athenians around 600 BC. Under Athenian law at that time, when a borrower of money could not repay his lender, the lender had the right to recover his loan by selling the borrower and his family into slavery. Since most of the defaulting borrowers were farmers, wealthy Athenians soon found they were unable to buy food, previously provided by these farmers who’d been sold into slavery and in many cases shipped abroad.
Into the resulting social chaos stepped Solon, a merchant in the export-import business. He said, “Fairness breeds no strife.” That saying rang true to both the wealthy and poor. The wealthy took fairness to mean that the government would not confiscate their wealth and distribute it to the poor; the poor took it to mean they were entitled to as much money as the wealthy. Both believed Solon was on their side.
            Solon’s most lasting legal reform was to forbid lenders to collateralize the bodies of borrowers, and for borrowers who could not repay their loans to “shake them off” by doing what we now call declare bankruptcy. Creditors could no longer sell debtors and their families into slavery, as unrepayable debts were forgiven. Those who had been sold into slavery and shipped abroad, came home and resumed farming, supplying the people of Athens with food and other products, restoring prosperity and social harmony.
            But Solon’s reform did not come off without some unwanted side effects. Some of his trusted friends, aware of this new law he was about to be enacted, borrowed money and bought land, using the purchased land to secure their loans. When Solon’s new law went into effect, these cleaver fellows owned their land free and clear. This did not sit well with the poor, who had previously owned the land they farmed. The poor were unhappy because Solon’s law did not redistribute wealth, and the wealthy were unhappy because they lost the money they’d loaned. The beneficiary was Athenian society, but society is a collective that does not speak with one voice.
            The essential idea of Solon’s bankruptcy law was to last for more than three and a half millennia. It helped enable the early USA to become the wealthiest society on Earth. Then, after year 2000, the US Congress, acting at the behest of lending bankers and credit card sellers, decided to revise the bankruptcy laws to favor the rich and punish the poor. This so stimulated rich lenders that it led to what is now called “the housing crisis” brought on by mortgage contracts worded so adroitly that millions of families lost their homes. Rich lenders then sought to recover lost loans by reselling those homes.
            The prospect of millions of homeless families wandering America from sea to shining sea was not enchanting. The rich had gotten their way—millions of poor were being punished for not being able to make scheduled payments on their mortgages. They weren’t sold into slavery—slavery was no longer legal—they were dumped into an ever-expanding pool of destitute and homeless, leaving rich lenders with vacant homes they could not resell because there were no buyers with enough money to buy. The housing crisis was really a byproduct of a dysfunctional monetary system.
            By 2008, it was not only a housing crisis that threatened American society, it was the entire monetary system, which had come to be based on precepts Aristotle had warned were untenable. What were the chances that a modern Solon or Aristotle would step forward and persuade Congress to save American society by revising the monetary system?
***

            The monetary system is not about your money or my money, it’s about our money, the stuff we use to buy and sell and keep track of who owes whom how much. Today, everybody needs money to live. If everybody has enough money to buy necessities, nobody starves or goes homeless and the whole society prospers.   Money became everybody’s business with the industrial revolution and massive population shift from farms to cities. Before this migration, most people grew their own food, made their own clothes, built their own homes and used money only for things they could not grow or make themselves.
Around the end of the Revolutionary War, my ancestors, Johnny and Jane Gover, left their home in Virginia as newlyweds with two African American slave couples and their four children and migrated west in three Conestoga wagons pulled by six oxen. Johnny and Jane kept a journal, read to me when I was a child. By winter’s beginning, they had reached the Cumberland River in the Virginia Territory of Kentucky and liked what they found: fertile land along the river they could clear and farm. They managed this with little or no money. Through the 1800s they grew their own food, handmade most of the things they needed, and cultivated two money crops: tobacco and whiskey. They hauled bundles of tobacco and barrels of whiskey to sell in Cincinnati, or, if they couldn’t get a good price there, rafted downriver to Memphis or New Orleans, then bought horses and rode home. When they wanted a church, a grand sire named Alexander and a slave named Ethan built a chapel from stone and oak, using wooden pegs for nails. About a hundred years later, it was shown in a movie titled “Raintree County.”
A distant relative, Harriet Simpson Arnow, wrote a novel titled The Dollmaker, in which the lead character copes with the transition from an agrarian culture of practically no money to the new moneyed culture that arose to dominance after the creation of the Federal Reserve System. In the beginning of the story, Gertie Nevels is in a doctor’s office waiting for her son to be cured of diphtheria, and she is contemplating buying a farm so that she and her husband can quit being sharecroppers and become self-sustaining farmers. Here’s how Arnow depicts Gertie’s struggle with the US Federal Reserve Notes (money) she needs:
Some were folded alone into tiny squares, others were folded two and three together, and many, like the four new [ones] were crumpled hastily into tiny balls. Each she unfolded and smoothed flat on the floor with the palm of her hand, looking at it an instant with first a search, then a remembering glance. Sometimes after a moment of puzzlement she whispered, "That was eggs at Samuel's two years ago last July," and to a five, "That was the walnut-kernel money winter before last," and to another one, "That was the big dominecker that wouldn't lay atall; she'd bring close to two dollars now." Of one so old and thin it seemed ready to fall apart at the creases, she was doubtful, and she held it to the light until she saw a pinhole through Lincoln's eye. "Molasses money."
Money now extends its tentacles into practically every facet of our lives; it’s as necessary to survival in our modern world as air and water. We buy food produced by huge corporate agribusinesses and buy water owned and sold by utility companies; we buy homes or rent apartments, and most of us make monthly payments on the cars we drive and the clothes we wear. We even pay for the money we use—created from thin air by bankers who lend to politicians, who pass the debt on to taxpayers at compound interest.
“It is difficult for Americans to come to grips with the fact that their total money supply is backed by nothing but debt, and it is even more mind boggling to visualize that, if everyone paid back all that was borrowed, there would be no money left in existence. That’s right, there would be not one penny in circulation—all coins and all paper currency would be returned to bank vaults—and there would be not one dollar in anyone’s checking account. In short, all money would disappear.” (1)
When gold and silver and other precious metals were used as money, money was a form of wealth itself. But what we use as money today is not wealth itself. A paper dollar is a symbol of wealth. It is not, like gold, a durable thing of intrinsic value.
Since the creation of the Fed, a monetary problem has been subtlely growing in the USA. One symptom of this problem is the healthcare system. In terms of intended results, the World Health Organization ranks the USA’s 37th in the world, but as a profit generator, it’s a all-time record super bonanza. It generates more money for less per capita healthcare than any other healthcare system conceived by the human mind. It is a triumph of fiscal efficiency. Moreover, since illness is what doctors need in order to prosper, iatrogenics (illness caused by medical applications) has become the leading cause of illness in the USA today. (Google “iatrogenics” for supporting documentation.) In a triumph of corporate public relations, Americans spend more money on doctors and pharmaceuticals than any other nation on the planet and are thereby made sicker.
We spend twice as much as the French and Germans and two and a half times as much as the Brits, yet we die sooner and our babies die in greater numbers. Thirty-eight million Americans were uninsured in 2000; now (2007) it’s forty-seven million. Employer-based health insurance is increasingly expensive, stingy, and iffy.(1)
Healthcare is as fundamental to prosperity as food and shelter. A money system is working when it’s spreading prosperity throughout society. When it’s constricting prosperity, it’s not working. Since World War II the US monetary system has grown to dominate the world. By the mid-1970s the gap between the incredibly rich and the starving had grown greater than ever before. History shows that when a money system isn’t working for the poorest, it will eventually fail the richest. As I write this it is assumed that the richest will convert dollars to hard assets—gold, real estate, commodities, etc.—to prosper during the coming “recession,” but what good will these hard assets do if/when the few remaining rich are surrounded by hordes of hungry and desperate people? What mainstream economists and the media were calling a recession in early 2008 could become the worst great depression in US history.
In this book I argue that the reason American society is headed for big trouble is our self-destructive use of money: Usury. In ancient times, usury was defined as excessive interest charges. Usurers were sometimes punished by cutting off a hand or being put to death. Usury has destroyed more societies than invading armies. Today, the ways and means of misusing money to destroy societies has expanded exponentially as money has become ever more varied and sophisticated. Many forms of interest charges are now classified as profits, the goal of investors and producers of goods and services. Public corporations pay interest to bond holders and stock shareholders, and our economic system is based on “production,” corporate profits. Most of us borrow money at various rates of interest to buy homes and cars, and use credit cards to buy a variety of things—all adding to interest payments. Every bit of money we use, borrow and repay, is loaned to us at interest by the bankers of the Federal Reserve System, resulting in what we call “the national debt.”
Congress privatized the issuance of our money in December 1913, handing control of the nation’s money over to bankers, who have a fiduciary responsibility to their shareholders to make profits. When politicians buy a couple of billion dollars from the bankers of the Federal Reserve System—for the war in Iraq, say—taxpayers are charged the sum borrowed plus compound interest, and this is called the “national” or “federal” or “government” debt.
The money to repay the interest is NOT put into the system as cash. Only the principle amount borrowed is put into the system, converted to cash as workers earn paychecks and deposit them in banks. The interest payment must be “found.” Inflation is the “finder of interest.”
When inflation doesn’t cover the interest payments on the national debt, more money is borrowed from the Fed in order to make the interest payments needed to perpetuate the system. This constitutes a “Ponzi scheme” that adds to inflation. If regular repayments aren’t made, loans cease to be bank assets and become bank liabilities. By definition, a Ponzi scheme inevitably collapses.
Compound interest means that a loan at 3% doubles in 24 years; at 6% it doubles in 12 years; at 12% it doubles in 6 years. What has happened in the USA since the mid-1970s is that total debt has skyrocketed while total wages, adjusted for inflation, have fallen. Since money is what holds a society together, this ever-widening gap between total debt owed and our collective inability to repay is a growing threat to rich and poor alike. A super wealthy elite and a variety of government bondholders are owed this money the rest of our society must repay—according to the rules of the existing system.
Since repayment will soon be impossible, simple logic would compel a change in the system, but as I explore in this book, when it comes to money we are often utterly illogical and downright irrational.
It’s certainly irrational that banks sell money to politicians at ever-compounding interest, and politicians stick taxpayers with the bill. As Henry Ford said, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be revolution before tomorrow morning.” Ford was no promoter or social harmony but he knew he couldn’t sell cars to impoverished consumers.
How did this conspiracy of bankers and politicians arise? Why is knowledge about this system so hard to find? Why is it hidden from the public in obfuscating jargon? And, defining usury as monetary systems and practices that destroy society, what can be done to save the USA from disintegration? These are some of the questions explored in this book.
Those who denigrate this system as anti-social call it “debt-based.” Those who benefit from it call it “independent central banking”—the implied assumption being that privatized central banks are desirable because they’re independent of government. But that’s a delusion because each nation’s central bank is a creation of that nation’s government and thus dependent on government for its existence, and on taxpayers for its gargantuan profits. The system enables public money to be used to subsidize private profits, for much of the so-called national debt is transfers of money to big corporations, whose only cost is campaign contributions to politicians.
A government agency, the Internal Revenue Service, collects taxes to repay private bankers for money loaned to government. And our government now loads more and more debt onto middle and lower class Americans while at the same time exporting jobs, importing cheap labor and downsizing wages adjusted for inflation. This threatens social cohesion by creating a bifurcated economy of the few who have more than enough and the many who struggle to stay alive. This is called progress by those who need cheap labor to produce new record profits.
            Thus, life for working class Americans has gradually become like living in the time of the Mongol invasion except that this new Genghis Khan and his army are costumed in suits and ties and riding the invisible steeds of legalese. These economic raiders are slashing and burning and plundering—but in such subtle, indirect ways that few people are aware of it. These new plunderers did not suddenly appear on the horizon at dawn and swoop down with swords drawn to lob off heads, rape and pillage as in past centuries. They arose like wisps of steam from the swamps of medieval beliefs. Most of them understand their mission as “making money.” When contemplating the seemingly slow but inexorable disintegration of society, they don’t see themselves as responsible, since they’re “only making money,” just as everyone must do to survive today. If you’re able and well educated, they’ll pay you well to help them plunder the USA...
            And the world, for the USA’s money system was imposed worldwide during the 1970s when the paper dollar replaced gold as the basis of all currencies. Now most of humanity is the object of the big moneymakers’ quest, and what is actually usurious and socially destructive is called “modern development and progress.” Words can become such slippery, slimy, snaky creatures.
            As author John Perkins put it: (3): “...this empire we’ve created really has an emperor, and it’s not the president of this country. The President serves...for a short period of time. But it doesn’t really matter whether we have a Democrat or a Republican in the White House or running Congress; the empire goes on because it’s really run by what I call the corporatocracy, which is a group of men who run our biggest corporations. This isn’t a conspiracy theory. They don’t need to conspire...they really are the equivalent of the emperor because they do not serve at the wish of the people, they’re not democratically elected, they don’t serve any limited term. They essentially answer to no one except their own boards, and most corporate CEOs actually run their boards...”
We obey the emperor’s minions in order to get paid the money we need to exist. They tell us our common goal is to “make more money.” A hundred dollars won’t buy as much this year as it did last year. What cost $1 in 1913 now cost between $100 and $150. The greater irony of this New World Order is that the money created by bankers out of thin air and loaned to government—obligating everyone else to repay at ever-compounding interest—is as phony as Monopoly Game board money.   What we call dollars are actually Federal Reserve Notes, obligating holders to repay the bankers of the Fed. At ever compounding interest.
            Money, in one form of another, is as ancient as humanity and was invented by almost every known society. It was invented to serve as a means of exchanging goods and services, and keeping track of who owes whom what goods and services or equivalent values. But during the past century, money metamorphosed from our servant to our master, as in, “We all work for money.” Money no longer serves us; we serve it. A growing number of people who study monetary systems believe the situation is now much worse than most people realize. For instance, Margrit Kennedy in her book Interest and Inflation Free Money (New Society Publishers, Philadelphia, PA):
"We are living in World War III already, an economic war. It is a non-declared war: A war of usurious interest rates, ruinous prices, and distorted exchange conditions. Remote controlled interest rates and terms of trade have killed millions of people on a plundered planet. They are killed by hunger, sickness, unemployment and criminality..."
How did money transform from servant to master? From something used to improve our lives to something others use to plunder us? The Founders of the USA fought the Revolutionary War to free us from such a scam. How were their good intentions overturned?
I’m keenly aware that to most people, the idea that the USA is being plundered seems absurd. This nation’s economy has fed and housed more people more lavishly than any other in history. During the 20th Century, the USA became world famous for creating the most affluent middle class ever. So what’s the problem?
It was our 19th Century monetary system that created the world-famous super-affluent American middle class of the mid-20th Century. We are only now beginning to see the fruits of the usurious system put in place in 1914 after Congress created the Federal Reserve System in December 1913. Money is no longer the means of trade, it is now the object of trade. To distinguish this system from traditional money systems, it is called “debt-based” because it is owned and operated by bankers whose mission is to make more and more money—not by producing useful things but by selling money at interest, thus enabling money to reproduce itself.
If today’s dollars were dogs, there’d be so many running wild in the streets, it would be a crisis. But most dollars exists today as electronic digits. In whatever form modern money is found today, it is an inanimate thing and does not naturally reproduce itself like dogs and cats and people.
Most people think money is still controlled by the federal government, and blame government for whatever ills they perceive in the system. Mainstream economists, who are proponents of “independent central banking,” dismiss critics of our debt-based monetary system as “out-dated socialists or amateur economists without formal training” (Wikipedia). I hasten to say that I’m NOT a socialist or revolutionary, I’m a concerned American who believes our national destiny is far too important to leave to bankers and economists.
We’ve been living on a seemingly limitless credit card since 1914, but it will be maxed out when our collective debt becomes larger than our collective ability to repay it. By 2008, this crisis point was fast upon us.
Before the creation of the Federal Reserve System in December 1913, debt was accumulated during booms and wiped off the books during busts. But what we call the national debt adds another dimension. Most of us aren’t aware that our government operates on a kind of seemingly limitless credit card, issued by the bankers of the Fed, and that future geneations of taxpayers are obligated to repay this debt they never agreed to assume, at ever compounding interest. Nor are most people aware that, since all cash and crdit now in the system is debt, repaying this debt would leave us with no money at all. Conversely, not repaying the debt could destroy us. What a conundrum! The debt-based system has been hidden from the public by a combination of bank secrecy, politically distorted economic statistics, and inflation that seems slow but is relentless.
Kurt Vonnegut was aware of the impending consequences of this system when, in May 2003, he gave a talk at the Mark Twain House in Hartford, Connecticut, and said:
Work persons have been sent home from (the construction of the Mark Twain Museum) because American “conservatives,” as they call themselves, on Wall Street and at the head of so many of our corporations, have stolen a major fraction of our private savings, have ruined investors and employees by means of fraud and outright piracy.
Shock and awe.
And now, having installed themselves as our federal government, or taken control of it from outside, they have squandered our public treasury and then some. They have created a public debt of such appalling magnitude that our descendants, for whom we had such high hopes, will come into this world as poor as church mice.
Shock and awe.
What are the conservatives doing with all the money and power that used to belong to all of us? They are telling us to be absolutely terrified, and to run around in circles like chickens with their heads cut off. But they will save us. They are making us take off our shoes at airports. Can anybody here think of a more hilarious practical joke than that one?
Smile, America. You’re on Candid Camera.
***
            Lending and borrowing money is as old as money itself. What’s new is the phenomenon of a tremendously usurious public debt: Government borrowing to be repaid by an unwitting third party, called “we the people.” Murray Rothbard (4) explains the difference between private borrowing and public borrowing:
“The public debt transaction...is very different from private debt...the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state. The government gets the money by tax-coercion; and the public creditors, far from being innocents, know full well that their proceeds will come out of that selfsame coercion. In short, public creditors are willing to hand over money to the government now in order to receive a share of tax loot in the future. This is the opposite of a free market, or a genuinely voluntary transaction. Both parties are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people's property, and both deserve the back of our hand.”
            Since colonial times, many voices have been raised against the debt-based money system, which originated in Europe in the 1600s and was repeatedly attempted in the USA, and was finally institutionalized in 1913 by the creation of the Fed. American presidents Thomas Jefferson, Martin Van Buren, Andrew Jackson, Abraham Lincoln and John F. Kennedy have been against it. Poet Ezra Pound was imprisoned in an insane asylum for agitating against it. Congressman Wright Patman, Democrat of Texas, who served from 1928 till his death in 1976, had this to say about it.
“I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money...I believe the time will come when people will demand that this be changed...when they will actually blame you and me and everyone else connected with the Congress for sitting idly by and permitted such an idiotic system to continue.”(5)
Today, Representative Ron Paul (R. Texas) is a rare exception among politicians because he understands the monetary system and has written eloquently about it, one example being his essay titled “The End of Dollar Hegemony,” found online. To quote just one sentence: “Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it.”
Global warming and/or climate change is happening much faster than previously predicted by world scientists, we have recently been told by those who have studied this problem in depth. We cannot deal with the dramatic increase in floods, droughts, hurricanes, tornadoes and other weather-related threats unless we have the money to pay each other to do so. But rescuing people uprooted by natural disasters is not something the bankers of the Fed find profitable—compared to the magnificent profits to be made by making war.
On the personal level, most people look around and see all the new cars and houses and decide things have never been better. But what’s actually happening is that the bankers of the Fed have conjured money from thin air, and this has been converted to Federal Bank Notes called paper dollars and coins, and we are obliged to repay the bankers of the Fed with real cash money earned by real work. The same people who own the banks that loaned us this nothing that became real money also own the media, which tells us daily that we’re better off today than ever before—richer, happier, freer, etc. And so we become obedient “wage slaves” and work hard to repay the bankers. In some remote area of our brains we suspect the good times may not last forever. This suspicion spurs us to work even longer and harder to repay that mysterious nothing that become dollars. As Alex Wallenwein puts it:
“They (bankers) gave up nothing when they entered a ‘credit’ on our account after approving our loan. The law then allowed us to spend that ‘nothing’ as if it were real money, and now we have to work to earn more of that same mysterious ‘nothing’ to pay the bankers ‘back’ what they never really gave us in the first place.” (6)
The usurious moneychangers Jesus assaulted in the temple must be laughing in their graves at the irony.

Endnotes:

The Creature from Jekyll Island: A Second Look at the Federal Reserve, by G. Edward Griffin, American Media, page
“Ghostbusters” by Hendrick Hertzberg, The New Yorker Magazine, October 1, 2007.
John Perkins is the author of, among other books, Confessions of an Economic Hit Man, and more recently, The Secret History of the American Empire. The quote used here is from an interview he did with radio and TV commentator Amy Goodwin in June 2007. The focus of these two books by Perkins is on how the present world empire was created by making loans to Third World countries.
“Repudiating the National Debt” by Murray Rothbard (1926–1995), posted on the von Mises web site January 16, 2004. Rothbard was professor of economics at the University of Nevada, Las Vegas, and vice-president for academic affairs at the Ludwig von Mises Institute. This article ran in the June 1992 issue of Chronicles (pp. 49–52).
Ron Paul in his essay, “The End of Dollar Hegemoney.”
“Will Gold Deflate,” an essay by gold researcher Alex Wallenwein, found online at www.safehaven.com.

I’m aware that everyone who lives in the Americas – North, South and Central – are Americans. But to most of the modern world, the word “Americans” is commonly used to describe people of the USA. So I use the words America and USA interchangeable.